Note 1 - The accompanying unaudited interim condensed consolidated financial statements, included herein, have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated statements have been prepared in accordance with the Company’s accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 20172018 and should be read in conjunction with the audited consolidated financial statements and the notes thereto included in that report. Unless the context indicates otherwise, references to the “Company” mean Noble Roman’s, Inc. and its subsidiaries.

In the opinion of the management of the Company, the information contained herein reflects all adjustments necessary for a fair presentation of the results of operations and cash flows for the interim periods presented and the financial condition as of the dates indicated, which adjustments are of a normal recurring nature. The results for the three-month period ended March 31, 20182019 are not necessarily indicative of the results to be expected for the full year ending December 31, 2018.2019.

Long-term receivable from franchisees represent receivables from approximately 80 different non-traditional franchisees (Noble Roman’s franchises located within a host facility). These receivables originated from a variety of circumstances, including where audits of a number of the non-traditional franchises’ reporting of sales found them to be underreporting their sales and, therefore, underpaying their royalty obligations. In July 2017,other instances, some franchisees were selling non-Noble Roman’s products under the Financial Accounting Standards Board ("FASB") issued Accounting Standards Updates ("ASU") 2017-11, which simplifies the accounting for certain accounting instruments with down round features. This update changes the classification analysis of certain equity-linked financial instruments such as warrants and embedded conversion features such that a down round feature is disregarded when assessing whether the instrument is indexed to an entity's own stock. As a result of this change in the quarter ended March 31, 2018,Noble Roman’s trademark. In addition, some receivables arose from the Company removed allincurring legal fees to enforce the franchise agreements and other collection costs totaling approximately $2.4 million which adds to the receivables in accordance with the agreements and some of the derivative accounting from its financial statements resulting in a gain of $142,858 recognized as a cumulative adjustment to retained earnings on January 1, 2018.

Pizzaco, Inc. currently owns and operates two Company-owned non-traditional locations, RH Roanoke, Inc. operates a Company-owned non-traditional location in a hospital and Noble Roman’s, Inc. owns and operates threefour Craft Pizza & Pub locations with a fourth under development and scheduled to open in late May 2018.locations. The Company intends to use its Craft Pizza & Pub locations as a base to support the franchising and continued future growth of that concept.

References in this report to the “Company” and to "Noble Roman's" are to Noble Roman’s, Inc. and its threetwo wholly-owned subsidiaries, Pizzaco, Inc., N.R. Realty, Inc. and RH Roanoke, Inc., unless the context indicates otherwise.

Noble Roman's Craft Pizza & Pub is intended to provide a fun, pleasant atmosphere serving pizza and other related menu items, all made freshto order using fresh ingredients in the view of the customers. In January 2017, the Noble Roman’s Craft Pizza & Pub opened its first Company-owned restaurant in Westfield, Indiana, a prosperous and growing community on the northwest side of Indianapolis. Since that time twothree additional Craft Pizza & Pubs have been opened as Company-owned restaurants with a fourth location under development.restaurants. Noble Roman’s Craft Pizza & Pub is designed to harken back to the Company’s early history when it was known simply as “Pizza Pub.” Like then, and like the new full-service pizza concepts today, ordering takes place at the counter and food runners deliver orders to the dining room for dine-in guests. The Company believes that Noble Roman’s Craft Pizza & Pub features many enhancements over the current competitive landscape. The restaurant features two styles of hand-crafted, made-from-scratch pizzas with a selection of 40 different toppings, cheeses and sauces from which to choose. Beer and wine also are featured, with 16 different beers on tap including both national and local craft selections. Wines include 16 high quality, affordably priced options by the bottle or glass in a range of varietals. Beer and wine service is provided at the bar and throughout the dining room.

The pizza offerings feature Noble Roman’s traditional hand-crafted thinner crust as well as its signature deep-dish Sicilian crust. After extensive research and development, the system has been designed to enable fast cook times, with oven speeds running approximately 2.5 minutes for traditional pies and 5.75 minutes for Sicilian pies. Traditional pizza favorites such as pepperoni are options on the menu, but also offered is a selection of Craft Pizza & Pub original creations like "Swims With Thewith the Fishes" and "Pizza Marguerita"Margherita". The menu also features a selection of contemporary and fresh, made-to-order salads and fresh-cooked pasta. In addition, the menu includes baked subs, hand-sauced wings and a selection of desserts, as well as Noble Roman’s famous Breadsticks with Spicy Cheese Sauce.

Additional enhancements include a glass enclosed “Dough Room” where Noble Roman’s Dough Masters hand make all pizza and breadstick dough from scratch in customer view. Also in the dining room is a “Dusting“Dust & Drizzle Station” where guests can customize their pizzas after they are baked with a variety of toppingscondiments and drizzles, such as rosemary-infused olive oil, honey and Italian spices. Kids and adults enjoy Noble Roman’s self-serve root beer tap, which is also part of a special menu for customers 12 and younger. Throughout the dining room and the bar area there are a large number of giant screen television monitors for sports and the nostalgic black and white shorts featured in Noble Roman’s earlier days.

The hallmark of Noble Roman’s Pizza for non-traditional locations is “Superior quality that our customers can taste.” Every ingredient and process has been designed with a view to produce superior results.

Tuscano’s Italian Style Subs is a separate non-traditional location concept that focuses on sub sandwich menu items but only in locations that also have a Noble Roman’s franchise. The ongoing royalty for a Tuscano’s franchise is identical to that charged for a Noble Roman’s Pizza franchise.

The Company’s proprietary ingredients are manufactured pursuant to the Company’s recipes and formulasspecifications by third-party manufacturers under contracts between the Company and its various manufacturers. These contracts require the manufacturers to produce ingredients meeting the Company’s specifications and to sell them to Company-approved third-party distributors at prices negotiated between the Company and the manufacturer.

At present, the Company has primarythird-party distributors strategically located throughout the United States. The distributor agreements require the primary distributors to maintain adequate inventories of all ingredients necessary to meet the needs of the Company’s franchisees and licensees in their distribution areas for weekly deliveries to the franchisee/licensee locations and to its grocery store distributors in their respective territories. Each of the primary distributors purchases the ingredients from the manufacturermanufacturers at prices negotiated between the Company and the manufacturers, but under payment terms agreed upon by the manufacturermanufacturers and the distributor,distributors, and distributes the ingredients to the franchisee/licensee at a price determined by the distributor agreement. Payment terms to the distributor are agreed upon between each franchisee/licensee and the respective distributor. In addition, the Company has agreements with numerous grocery store distributors located in various parts of the country which agree to buy the Company’s ingredients from one of the Company’s primary distributors and to distribute those ingredients only to their grocery store customers who have signed license agreements with the Company.

The Company sells franchises for both non-traditional and traditional locations.

Noble Roman’s Take-n-Bake Pizza licenses for grocery stores are governed by a supply agreement. The supply agreement generally requires the licensee to: (1) purchase proprietary ingredients only from a Noble Roman’s-approved distributor; (2) assemble the products using only Noble Roman’s approved ingredients and recipes; and (3) display products in a manner approved by Noble Roman’s using Noble Roman’s point-of-sale marketing materials. Pursuant to the distributor agreements, the primary distributors place an additional mark-up, as determined by the Company, above their normal selling price on the key ingredients as a fee for the Company in lieu of royalty. The distributors agree to segregate this additional mark-up upon invoicing the licensee, to hold the fees in trust for the Company and to remit them to the Company within ten days after the end of each month.

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results may differ from those estimates. The Company periodically evaluates the carrying values of its assets, including property, equipment and related costs, accounts receivable and deferred tax assets, to assess whether any impairment indications are present due to (among other factors) recurring operating losses, significant adverse legal developments, competition, changes in demand for the Company’s products or changes in the business climate which affect the recovery of recorded value. If any impairment of an individual asset is evident, a charge will be provided to reduce the carrying value to its estimated fair value.

The following table sets forth the percentagerevenue, expense and margin contribution of the Company's Craft Pizza & Pub venue and the percent relationship to totalits revenue:

The following table sets forth the revenue, expense and margin contribution of the listed items included in Noble Roman’s consolidated statements of operations forCompany's non-traditional franchising venue and the three-month periods ended March 31, 2017 and 2018, respectively.percent relationship to its revenue:

The revenue from this venue grew from $1.11 million to $1.14 million primarily because of an additional restaurant opened in June 2018, however that was mostly offset by highly unusual and extreme winter weather conditions in Indiana during the months of January and February 2019. Total revenue in January was $337,000, in February $356,000 and in March $450,000. Revenue increased with the return of more normal weather conditions experienced in March.

Salaries, wages and other operating costs increased from $2.256.0% to 67.7% as a result of low revenue in January and February due to weather, as explained in the paragraph above.

Salaries and wages, trade show expense and other operating costs decreased from $649,000 to $495,000 for the three-month period ended March 31, 20182019 compared to the comparable period in 2017. One-time fees, franchisee fees2018. In January, the Company reviewed this venue in depth to find ways to minimize costs and equipment commissions (“upfront fees”)accomplish its missions with fewer people and lower costs in general. These efforts are reflected in the $154,000 in decreased expenses during the three-month period ended March 31, 2019 and are expected to benefit results in future quarters.

Gross margin contribution from this venue increased to 69% from $64,00058% in the three-month period ended March 31, 2019 compared to $79,000the comparable period in 2018.

Comparing the various expenses is not meaningful since they reflected different types of non-traditional locations. The total expenses were $154,000 for the three-month period ended March 31, 20182019 compared to $284,000 for the comparable period in 2017.2018. The breakdown of royalties and fees, less upfront fees,primary reason for this decrease was two fewer locations operated by the three-month periods ended March 31, 2018 and 2017, respectively, were as follows: royalties and fees from non-traditional franchises other than grocery stores were $1.0 million and $1.0 million; fees from the grocery store take-n-bake locations were $404,000 and $462,000; royalties and fees from traditional locations were $55,000 and $57,000; and royalties and fees from stand-alone take-n-bake locations were $0 and $17,000, reflecting the discontinuation of that venue.

Restaurant revenue – Company-operated non-traditionalGross margin contribution from this venue increased to 9.9% from $281,000 to $288,000 for1.5% in the three-month period ended March 31, 20182019 compared to the correspondingcomparable period in 2017. The reason for2018. As discussed above, two of the increase was same store sales increases.locations being operated in 2018 were only being operated to the end of their contract terms.

Net income before income tax increased to $627,000 from $193,000 to $403,000$539,000 for the three-month period ended March 31, 20182019 compared to the corresponding period in 2017. This increase2018. Net income before taxes was primarilysignificant as the resultCompany will not pay any income taxes on approximately the next $15 million of taxable income.

Net income increased from $403,000 to $476,000 for the increased revenue fromthree-month period ended March 31, 2019 compared to the new Craft Pizza & Pub locations and a decreasecorresponding period in interest cost partially offset by an increase in salaries and wages to create more capacity for franchise sales.2018.

The Company’s strategy in past years has beenis to grow its business by concentrating on franchising/licensing non-traditional locations, including grocery store delis to sell take-n-bake pizza. This strategy was intended to not require significant increase in expenses. The focus on franchising/licensing non-traditional locations will continue to be the a primary element of the Company’s strategy but, in addition, over the past two years the Company has been developing a major business initiative by re-designing and re-positioningfranchising its updated stand-alone franchise for the next generation stand-alone prototype called “Noble Roman’s Craft Pizza & Pub.” As a result, the Company opened its firstconcept, Craft Pizza & Pub on January 31, 2017, the second on November 17, 2017,and operating a third on January 18, 2018. A fourth location is under development with plans to open in late May 2018. The Company may open up to two additionallimited number of Company-owned Craft Pizza & Pub locations,restaurants. The Company currently owns and has commenced efforts to franchiseoperates four Craft Pizza & Pub locations of which two were opened in certain areas, as well.2017 and two were opened in 2018. The Company is currently considering opening a few additional Craft Pizza & Pub locations over the next 18 months.

The Company is operating threeone non-traditional locationslocation in a hospital and does not intend to operatehas no plans for operating any additional non-traditional locations.

The Company’s current ratio was 2.6-to-12.3-to-1 as of March 31, 20182019 compared to 2.6-to-12.4-to-1 as of December 31, 2017.2018.

In January 2017, the Company completed the Offering in the amountoffering of $2.4 million principal amount of Notesconvertible subordinated notes convertible to common stock at $.50 per share and Warrantsdue three years after issue date (the "Notes") and warrants to purchase up to 2.4 million shares of the Company’s common stock. The Company used the net proceedsstock at an exercise price of the Notes$1.00 per share, subject to fund the opening of a Noble Roman’s Craft Pizza & Pub restaurant and for general corporate purposes. In February 2018, one of thoseadjustment (the "Warrants"). Notes in the principal amount of $100,000 was$450,000 have been converted into 200,000to 800,000 shares of Noble Roman's common stock and in April 2018, another Notethe holders of the Notes in the principal amount of $100,000 was$650,000 have extended the maturity of their Notes to January 2023. The Company's loan agreement with the Bank (as defined below) prohibits the Company from repaying any of the Notes until the senior debt is paid in full, however the loan agreement allows Note holders to convert the Notes to common stock at any time in accordance with the terms of the Notes. The remaining Notes that mature in 2019 and 2020 must either be converted into 200,000 sharesto common stock, extended beyond the maturity of Noble Roman's common stock.the senior debt or replaced with other like securities. The Company may not be able to accomplish any of those alternatives. If the Notes mature and the Company does not pay amounts due, it would cause a cross-default under the Agreement. The Company intends to extend or refinance with external capital the Notes maturing in 2019 and 2020. However, the Company may not be able to refinance its debt or sell additional debt or equity securities on favorable terms, or at all.

ThePrior to December 31, 2018, the Company hashad drawn the full $1.6 million available under the Development Line of Credit to build outdevelop three new locations of Noble Roman’s Craft Pizza & Pub. As of March 31, 2018, the Company had drawn $1.1 million of the Development Line of Credit used in the development of the Craft Pizza & Pubs that opened in November 2017, and January 2018 and the remaining $500,000 in April and May 2018.June 2018, respectively. Repayment of the Development Line of Credit beginsbegan four months following the final draw for each location in monthly installments on a seven-year principal amortization schedule plus interest at the rate of LIBOR plus 4.25%, with the balance due in September 2022.

The Loan Agreement contains affirmative and negative covenants, including, among other things, covenants requiring the Company to maintain certain financial ratios. The Company’s obligations under the Loan Agreement are secured by first priority liens on all of the Company’s assets and a pledge of all of the Company’s equity interest in suchits subsidiaries. In addition, Paul W. Mobley, the Company’s Executive Chairman and Chief Financial Officer, executed a limited guarantee only of borrowings under the Development Line of Credit which is to be released upon achieving certain financial ratios by the Company'sCompany’s Craft Pizza & Pub locations. The Company was in complianceis currently seeking to resolve a disagreement with the covenants asBank regarding the interpretation of March 31, 2018.

As a result of the financial arrangements described above and the Company’s cash flow projections, the Company believes it will have sufficient cash flow to meet its obligations and to carry out its current business plan for the next 12 months.months, subject to the Company’s obtaining of external financing to refinance the $1.3 million of Notes maturing in 2019 and 2020. The Company’s cash flow projections for the next two years are primarily based on the Company’s strategy of growing the non-traditional franchising/licensing venues, operating the open Craft Pizza & Pub locations the plans to open another Craft Pizza & Pub location in May 2018, plus launching an aggressiveand pursuing a franchising program for Noble Roman’s Craft Pizza & Pub restaurants. Subject to availability of financing, the Company intends to open additional Company-owned Craft Pizza & Pub restaurants in the future. Any additional location would likely require the Company to secure financing from external funding sources, which may not be available on favorable terms, if at all.

The Company does not anticipate that any of the recently issued Statement of Financial Accounting Standards will have a material impact on its Consolidated Statement of Operations or its Consolidated Balance Sheet except:

The statements contained above in Management’s Discussion and Analysis concerning the Company’s future revenues, profitability, financial resources, market demand and product development are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) relating to the Company that are based on the beliefs of the management of the Company, as well as assumptions and estimates made by and information currently available to the Company’s management. The Company’s actual results in the future may differ materially from those indicated by the forward-looking statements due to risks and uncertainties that exist in the Company’s operations and business environment, including, but not limited to: resolution of a disagreement with the Bank over the interpretation of certain financial covenants and/or the Company's ability to service or refinance its debt, competitive factors and pricing pressures, non-renewal of franchise agreements, shifts in market demand, the success of new franchise programs, including the new Noble Roman’s Craft Pizza & Pub format, the Company’s ability to successfully operate an increased number of Company-owned restaurants, general economic conditions, changes in demand for the Company’s products or franchises, the Company’s ability to service and refinance its loans, the impact of franchise regulation, the success or failure of individual franchisees and changes in prices or supplies of food ingredients and labor as well as the factors discussed under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017.2018. Should one or more of these risks or uncertainties materialize, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended.

Based on their evaluation as of the end of the period covered by this report, A. Scott Mobley, the Company’s President and Chief Executive Officer, and Paul W. Mobley, the Company’s Executive Chairman and Chief Financial Officer, have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) are effective. There have been no changes in internal controls over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

The Company is not involved in material litigation against it.